Journal of Small Business Management 2003 41(1), pp. 47–67
Managerial Behavior, Entrepreneurial Style,
and Small Firm Performance*
by Eugene Sadler-Smith, Yve Hampson, Ian Chaston,
and Beryl Badger
Considerable effort has been devoted to identifying the general characteristics of
entrepreneur; however, much of this has been conducted from a trait-based rather
than from a behavioral perspective. In this study of small firms in the United
Kingdom, we explored the relationships among managerial behaviors (based upon
a competence model), entrepreneurial style (based on Covin and Slevin’s theory), and
firm type (in terms of sales growth performance). Principal components analysis of
a management competence inventory identified six broad categories of managerial
behavior. Regressing a measure of entrepreneurial style on these six behaviors suggested that managing culture and managing vision are related to an entrepreneurial style, while managing performance is related to a nonentrepreneurial style.
Entrepreneurial style—but not managerial behavior—was associated positively with
the probability that a firm would be a high-growth type. The results are discussed
from the perspective of a model of small firm management that posits separate entrepreneurial, nonentrepreneurial, and generic management behaviors derived from a
global competence space.
Introduction
The issue of what constitutes an entrepreneurial approach to the management
of organizations is an important one in
delineating and describing the field of
small business management/entrepreneurship and its relationship to general
management. Such inquiry prompts a
number of questions: For example, what
kinds of activities does an entrepreneur
perform? What roles can be inferred from
these activities? What are the distinguishing characteristics of entrepreneurial work? What variability exists among
entrepreneurial and managerial jobs?
(Gartner 1988). A decade ago Churchill
(1992) argued that considerable progress
had been made with regard to the similarities and differences in the general
characteristics of entrepreneurs and
small business owners. These differ-
*The authors are grateful to the Controller of Her Majesty’s Stationery Office for permission to use the Senior Manager Standard (1995) in this research. The Standard is Crown Copyright and is reproduced under license from Her Majesty’s Stationery Office.
SADLER-SMITH et al.
47
ences, and those between small business
owners, entrepreneurs, and managers in
large organizations, have been elaborated upon further in recent years (see,
for example, Becherer and Maurer 1999;
Chell, Haworth, and Brearley 1991;
Stewart et al. 1998; Hyrsky 2000). Much
of this research has been conducted from
a trait-based perspective by examining
the innate characteristics of entrepreneurs. While studying traits has achieved
some notable successes, what is less
clear are the ways in which managers in
different kinds of small firms behave in
managing their businesses and, furthermore, how this relates to the concept of
entrepreneurship and to firm performance. Management competence provides
a potentially useful lens through which
to frame these and other questions. Such
a perspective is apposite given that in
parallel with debates about entrepreneurship and small firm performance
(see, for example, Cohen and Musson
2000; Du Gay 2000; Kaplan 1987) the
issue of management competencies continues to be an area of vigorous debate
among scholars, practitioners, and policymakers (see Burgoyne 1989; Burgoyne
1993; Bridge, O’Neill, and Cromie 1998;
Gherardi 1999; Gruglis 1997; Holton and
Naquin 2000). Entrepreneurship has
been linked with firm type (high growth
versus low growth), managerial behaviors have been linked with firm type,
and managerial behaviors have been
examined through functional analyses.
However there have been few, if any,
attempts to draw these literatures
together and to explore the relationships
among small business management/
entrepreneurship, firm type (in terms of
growth performance), and management
behaviors utilizing competence as an
analytical framework. It is our assertion
that entrepreneurship and managerial
competence represent two important and
complementary strands of small firm
research and practice that appear to
have led largely separate existences. An
48
exploration of both of these issues may
help to further meaningfully circumscribe the areas of entrepreneurship
and small business management and to
shed additional light on those managerial behaviors that are associated
with entrepreneurship and small firm
performance.
Entrepreneurial Style
and Firm Type
Entrepreneurship has been defined as
the process of “creating something different with value by devoting the necessary time and effort, assuming the
accompanying financial, psychological,
and social risks and receiving the resulting rewards of monetary and personal
satisfaction” (Hisrich and Peters 1992,
p.6). Carland et al. (1984) argued that
entrepreneurship could be defined in
terms of innovative behavior allied to a
strategic orientation in pursuit of profitability and growth. There have been a
number of empirically-based efforts to
describe the attributes of entrepreneurship in terms of personality traits, attitudes, and management behaviors. The
trait-based perspective has predominated
and continues to be applied, as Utsch
et al. (1999) investigated recently the
differences between entrepreneurs and
managers in East Germany. They
observed that entrepreneurs exhibited
greater levels of self-efficacy, higherorder need strength, readiness to change,
interest in innovation, Machiavellism
(competitive aggression), and need for
achievement than did managers ( p <
0.05). Managers on the other hand
showed higher control rejection (lower
autonomy). There were no statistically
significant differences with respect to
planfulness, action orientation after
failure, and goal orientation. Hyrsky
(2000) in a factor analytical study of
small business managers in Europe,
North America, and Australia identified
work commitment and energy, economic
values and results, innovativeness and
JOURNAL OF SMALL BUSINESS MANAGEMENT
risk taking, ambition and achievement,
and egotistic features as dimensions of
entrepreneurship. Georgelli, Joyce, and
Woods (2000, p.14) described “being
entrepreneurial” as being willing to take
risks and being innovative, articulated
with an ambition to grow. Georgelli,
Joyce, and Woods went on to suggest that
the core competencies for entrepreneurship are a capacity for changing business
processes, the launching of new products, and services and a planning capacity but noted that not all small businesses
are equipped with these capabilities
(p.17), nor are all managers necessarily
predisposed towards them. Covin and
Slevin (1988, p.218) defined an entrepreneurial style in terms of the extent to
which “top managers are inclined to take
business-related risks (a risk-taking
dimension), favor change and innovation
(an innovation dimension), and compete
aggressively with other firms (a proactiveness dimension).” On the other hand,
a nonentrepreneurial style, in Covin and
Slevin’s (1988) terms, is characterized as
being risk-averse, noninnovative, passive, and reactive. They described the
development and use of a measure of
entrepreneurial style based upon previous theorizing and research by Khandwalla (1977) and Miller and Friesen
(1982) and that provides a potentially
useful tool in this context for operationalizing the key concept of entrepreneurial style.
Entrepreneurship, Small
Business Management,
and Firm Type
Carland et al. (1984) attempted to
draw a clear distinction between entrepreneurs and owner managers of small
businesses; the former, they argued,
are concerned with “profitability and
growth,” while the main concern of the
latter is securing an income to meet their
immediate needs. Stewart et al. (1998)
found that small business owners were
more comparable to managers than to
entrepreneurs (the latter were higher
in achievement motivation, risk-taking
propensity, and preference for innovation). Hodgetts and Kuratko (2001) have
summarized the differences:
Small businesses are businesses
that are independently owned and
operated, are not dominant in
their field, and usually do not
engage in many new or innovative
practices . . . The entrepreneur’s
principal objectives are profitability and growth . . . the business is
characterized by innovative strategic practices and continued
growth . . . [and] may be seen as
having a different perspective
from small business owners in the
actual development of their firm
(pp.5–6).
This suggests therefore that the intention to grow (Georgelli, Joyce, and
Woods 2000) and an innovation/change
orientation are characteristics of entrepreneurial behavior. The issue of entrepreneurship may be linked to the wider
agenda of regional or national economic
growth. For example, Kuratko and Hodgetts (1998) noted the importance of new
and smaller firms to the United States
economy and in particular of jobcreating fast-growing businesses versus
lifestyle businesses. The former type,
sometimes referred to as gazelles in
Birch’s (1979) terminology and described
by Kuratko and Hodgetts (1998) as being
leaders in innovation, cited evidence of
total numbers of innovations, innovations per employees, and numbers of
patents in support of this assertion.
Orser, Hogarth-Scott and Riding (2000)
argued that much employment growth is
attributable to the minority of firms that
grow quickly. They also noted that business owners’ motives for growth are not
homogeneous and “appear to reflect
SADLER-SMITH et al.
49
experiential and situational differences”
(p.44).
Stewart et al. (1998) suggested that
the difference between entrepreneurs
and small business owners is one area
for further research that may add to a
more complete understanding of the
entrepreneur. A pertinent question for
entrepreneurship theory and small firm
management practice is the following:
What are the behaviors that characterize
management in small businesses (differentiated in terms of entrepreneurial
style) and how do these relate to firm
type in terms of performance (differentiated in terms of a high growth/low
growth distinction)? Gartner (1988)
argued that trait-oriented research has
not proved wholly adequate in explaining the phenomenon of entrepreneurship and advocated behavior as an
alternative and more promising way
forward. Previous research and theorizing suggest that a number of managerial
behaviors may be associated with an
entrepreneurial style. For example,
Moss Kanter (1982) argued that there is
a strong association between accomplishment in innovation and the employment of a participative–collaborative
management style, which itself is associated with particular organizational cultural attributes. The author defined this
in terms of persuading rather than ordering; team building; seeking input from
others; being politically sensitive; and
sharing rewards and recognition willingly and went on to note that when carrying out basic accomplishments (that is,
noninnovative activities), such a style is
useful but not necessary—indeed a traditional, autocratic style may be equally
effective (Moss Kanter 1982). A summary
of previous research is presented in
Table 1. From this it may be argued that
some of the principal differences
between entrepreneurial management
and nonentrepreneurial management
include the following: (1) Entrepreneurial managerial behaviors promote a
50
culture of creativity and risk taking,
create flat informal structures, and formulate strategy in order to take advantage of identified opportunities; (2)
Nonentrepreneurial managerial behaviors emphasize planning, control, monitoring, evaluation, and formalized
organizational structures.
Entrepreneurial Style
and Managerial
Behaviors
The 1980s, as well as being the decade
of enterprise (Kaplan 1987), saw the
articulating of desirable managerial
behaviors in the language of management competence (see Mabey, Salaman,
and Storey 1998). This approach became
an important element of management
thinking and influenced government
policy in a number of national
economies. For example, in the United
Kingdom such an approach manifested
itself in the identification of generic
management competences derived via
functional analyses of managerial work,
and the outcome of which it has been
proposed may be extended to the
smaller firm sector. Attempts to analyze
and to categorize the attributes of effective managerial behavior have their
roots in the work of Boyatzis (1982),
who described a job competency as “an
underlying characteristic of a person”
that describes what an individual can do
(and not necessarily what he or she
does) and that is causally related to effective and/or superior performance in a job
(p.23). Competencies may be said therefore to reflect desirable managerial
behaviors whose relative efficacy may be
context dependent.
Successive United Kingdom governments have emphasized the importance of the development and use of
descriptors of desirable managerial
behaviors as a lever to enhance the skill
level of managers in general through
competence-based training, assessment,
JOURNAL OF SMALL BUSINESS MANAGEMENT
Table 1
Comparison of Entrepreneurial and Nonentrepreneurial Management
Source
Entrepreneurial Domain
Nonentrepreneurial Domain
SADLER-SMITH et al.
Chandler and Hanks
(1994)
Scanning Environment for Opportunities;
Formulating Appropriate Strategies to Take
Advantage of Opportunities (Entrepreneurial
Competence)
Acquire and Utilize Resources
Develop Programs and Procedures
Develop Budgets
Delegate
Manage Employee and Customer Relationships
Evaluate Performance (Managerial
Competence)
Cornwall and Perlman
(1990)
Scanning for and Active Pursuit of New
Ventures
Change Viewed as Opportunity and Means to
Longer-Term Survival, Adaptation, and
Growth through intelligent Approach to Risk
Culture (including Affective Components)/
Informal Structure Nurtures Adaptation
Top-Down and Bottom-Up Approaches to
Decision-Making
People Are a Scarce and Precious Resource.
Creativity Is Encouraged.
Defensive Stance with Niche Protection
Change Viewed as Threat
Control Focused on Short-Term Targets with
Risk Minimization
Analytical/Objective Culture
Serves to Protect the Status Quo
Formalized Lines of Communication with
Decision-Making Determined from the Top
People Are an Abundant and Easily
Replaceable Resource.
Creativity Is Tolerated.
51
52
JOURNAL OF SMALL BUSINESS MANAGEMENT
Table 1
Continued
Source
Stevenson, Roberts, and
Grousbeck (1985)
Entrepreneurial Domain
Nonentrepreneurial Domain
Strategic Orientation Driven by Perception of
Opportunity in Environment of Rapid Change
Commitment to Opportunity Is Revolutionary/
Short Duration and Management of Risk.
Commitment of Resources Is Multi-Staged with
Minimal Commitment at Each Stage (with Lack
of Longer-Term Control).
Episodic Use/Rent of Required Resources
Flat Management Structure with Informal
Networks
Strategic Orientation Driven by Resources
Currently Controlled
Established Performance Measurement Criteria
Commitment to Opportunity Is Evolutionary/
Long Duration with Reduction of Risk.
Commitment of Resources Is Single-Staged
with Complete Commitment/Formal
Planning.
Required Resources Owned/Employed and
Efficiency of Use Measured.
Formalized Hierarchy
and certification (Loan-Clarke et al.
2000; Du Gay, Salaman, and Rees 1996).
In the late 1980s the United Kingdom’s
Management Charter Initiative (MCI)
was launched to shape and promote
management development, particularly
competence-based management development. The MCI became the “lead
(policy-advising) body” for management
in the United Kingdom and first published a set of standards for senior
managers in 1995 (Management Charter
Initiative 1995). The MCI since has been
superseded by the Management Enterprise and Training Organization (METO),
whose remit explicitly covers small and
medium-sized enterprises. The MCI/
METO Senior Manager Standard consists
of two related elements, performance
standards, and personal competencies.
The latter apply across different management levels, while the former
describe desirable behaviors for senior
managers in a number of key areas of
business performance. The nine units
of the performance standard (and used
as the basis of our research) are (1)
external trends; (2) internal strengths
and weaknesses; (3) stakeholders; (4)
strategy and commitment; (5) programs,
policies, and plans; (6) delegation and
action; (7) culture; (8) monitoring; and
(9) evaluating and improving.
Since managers in many small firms
tend not to specialize in one specific
functional area but are required to
operate across the range of management
competencies, Loan-Clarke et al (2000,
p.179) argued that “the applicability of
competence-based MTD [management
training and development] to the broader
roles of managers in small businesses is
likely to be greater than to the roles of
many managers in large organizations”
(since the latter tend to specialize while
the former are often required to perform
a more generalist role). Competencebased analyses of managerial work
provide a potentially useful descriptor of
those management behaviors that are
assumed to be causally related to effective and/or superior job performance.
The nature of the relationship between
entrepreneurial style and particular
modes of managerial action (as described in competence statements) is not
clear. In terms of the antecedents of
behavioral preferences and the links to
psychological traits, Berr, Church, and
Waclawski (2000, p.154) argued that
“individual differences in personality
style do have a moderate yet significant
impact upon management behavior.” We
chose to concentrate on the behavioral
level of analysis rather than to explore
trait-level phenomena since the latter
have been well researched (see, for
example, Brockhaus and Horwitz 1986;
Olsen 1985; Chell, Haworth, and Brearley 1991; Frese, van Gelderen, and
Ombach 2000) and critiqued (see, for
example, Gartner 1988).
Entrepreneurial Style,
Managerial Behavior,
and Firm Type
From a conceptual perspective, scholars have previously compared and
contrasted the entrepreneurial and
administrative (managerial) domains. For
example, Hodgetts and Kuratko (2001)
drew a distinction between entrepreneurial style (characterized by creativity,
innovation, and risk-taking behaviors)
and managerial style (characterized planning and organizational behaviors) but
did not see these as mutually exclusive:
“The ability to remain entrepreneurial
while adopting administrative [managerial] traits is vital to the venture’s successful growth” (p.345). Hisrich and
Peters (1992), building upon the work of
Stevenson and Sahlman (1986), contrasted entrepreneurial versus managerial approaches in terms of five key
business dimensions—strategic orientation, commitment to opportunity,
commitment of resources, control of
resources, and management structure.
SADLER-SMITH et al.
53
Within this overall context, competencebased frameworks present complementary framework for the analysis of
managerial behaviors. Mukhtar (1998) in
a study of entrepreneurship suggested
that all firms operate inside a global competence space within which businessspecific competencies may be identified.
Following this line of thought and as a
basis for our research we argue that (1)
there is a global competence space comprising managerial behaviors that may be
identified via functional analyses and
articulated in competence standards; (2)
the global competence space comprises
entrepreneurial management behaviors,
administrative
(nonentrepreneurial)
management behaviors (Stevenson and
Sahlman 1986), and generic (shared)
management behaviors; (3) management
behaviors within smaller firms may be
mapped within the global competence
space, and particular firms may be
hypothesized as possessing a portfolio of
behaviors comprising entrepreneurial,
administrative, and generic elements and
as related to the organization’s entrepreneurial style (Figure 1). Furthermore,
entrepreneurial style and the associated
behaviors are hypothesized as predictors
of performance in terms of high-growth
[gazelles, in Birch’s (1979) terminology]
or low-growth (lifestyle or small business
owner) types.
Using the MCI’s performance standards, Covin and Slevin’s (1988) operationalization
of
the
concept
of
entrepreneurship and the framework
proposed in Figure 1, the following
propositions were used as the bases of
our investigations:
Proposition 1a: There will be a positive
relationship between entrepreneurial
style and those managerial behaviors
that (1) promote a culture of creativity and risk taking; (2) create flat
informal structures; and (3) formulate strategy in order to take advantage of identified opportunities.
54
Proposition 1b: There will be a negative
relationship between entrepreneurial
style and those managerial behaviors
that emphasize planning, control,
monitoring, evaluation, and formalized organizational structures.
Proposition 2: There will be a positive
relationship between entrepreneurial
style and firm type (high growth).
Proposition 3: There will be a positive
relationship between entrepreneurial
management behavior and firm type
(high growth).
From a theoretical perspective the
research will attempt to link two separate streams of management theory and
practice, namely small business/entrepreneurship and competence. The findings may be relevant from a practical
standpoint since they may assist policymakers and educators in identifying
those behaviors that may be a valid
element of an entrepreneurial management development curriculum. The
research will take smaller firms in the
United Kingdom as its context for a
number of reasons: (1) They are perceived as having a considerable contribution to make to innovation (Carr 2000;
Freel 2000); (2) The issue of management
competence is increasingly to the fore in
the small firm sector (Loan-Clarke et al.
2000, p.177); (3) Small firms are populated by people who perform entrepreneurial, managerial, and operational
functions (Cohen and Musson 2000); and
(4) The effective management of smaller
firms is seen by many as crucial to the
economic growth of regional and
national economies (Westhead and
Storey 1996; Wilson 1995), especially
since it is estimated that over 99 percent
of firms in the United Kingdom employ
less than 100 people (Mukhtar 1998).
The study of smaller firms presents
opportunities and advantages to the
researcher since the complexities of
JOURNAL OF SMALL BUSINESS MANAGEMENT
Figure 1
Management Behaviors, Entrepreneurial Style,
and Firm Type
Entrepreneurial
behaviors
+
Nonentrepreneurial
behaviors
-
Entrepreneurial
style
+
Firm type
(high growth or
low growth)
Generic
behaviors
Global
competence
space
multilevel research may be fewer than in
larger firms because structures are
simpler with greater internal cultural
consistencies and fewer diverging
internal forces (Chandler and Hanks
1994).
Data Collection
The study was cross-sectional, and
data were collected by means of a
postal questionnaire survey mailed to
550 small and medium-sized enterprises
in the southwest region of the United
Kingdom (comprising the counties of
Devon and Cornwall). Respondents were
selected randomly from a commercially
available database. The survey form consisted of three pages and an accompanying letter that stipulated that a small
donation to charity would be made for
every completed questionnaire received.
The questionnaire consisted of the following three sections:
Section 1, Respondent Information:
number of employees, sector (manufacturing, service, or construction),
sales growth (percent) over past five
years (seven-point scale).
Section 2, Managing Your Business:
Respondents were asked to indicate
the importance they attached to each
of 34 separate managerial behaviors
for the running of their businesses
(five-point scale; very important
scored five and very unimportant
scored one). The items themselves
were drawn from the United
Kingdom MCI’s senior manager performance standard and comprised
nine separate multiple-item scales
(referred to henceforth as manage-
SADLER-SMITH et al.
55
ment behaviors; numbers in parentheses refer to the item numbers in
the appendix): (1) external trends
(three items, MB1–MB3); (2) internal
strengths and weaknesses (five items,
MB4–MB8); (3) stakeholders (two
items, MB9–MB10); (4) strategy and
commitment (four items, MB11–
MB14); (5) programs, policies, and
plans (five items, MB15–MB19);
(6) delegation and action (five
items, MB20–MB24); (7) culture
(three items, MB25–MB27); (8) monitoring (three items, MB28–MB30);
and (9) evaluating and improving
(four items, MB31–MB34).
Section 3, Your Business: This consisted
of Covin and Slevin’s (1988) entrepreneurial style scale with two
minor modifications: One large firmspecific item from the original scale
was dropped; and a five-point scale
(rather than the seven-point scale
as used by Covin and Slevin) commensurate with Section 2 was used.
This scale and variants of it have
a long tradition in the strategic
management literature (AtuaheneGima and Ko 2001) and consistently
have demonstrated reliability and
validity.
The questionnaire was mailed to the
managing director of each of the firms
sampled; this person was taken as being
a knowledgeable key informant and
hence provided a valid approach to
measuring
organizational
processes
(Shortell and Zajac 1990). The use of
managers in small businesses may overcome some of the difficulties associated
with research in larger organizations; for
instance, the lack of functionalist divides
in smaller firms and the workings of their
organizations may be more traceable
(Cohen and Musson 2000, p.32), and
both entrepreneurial and managerial
competencies may be located in individual managers (Carr 2000).
56
Results
Characteristics of Sample
The number of usable questionnaires
received was 156 and represented a
response rate of 28 percent. The sample
characteristics were as follows: (1)
sector: manufacturing, 88 (56 percent);
service, 34 (22 percent); construction, 34
(22 percent); (2) size: median number of
employees, 26; (3) sales growth: (a)
decreased by more than 10 percent, 16
(10.3 percent); (b) decreased by between
one and 10 percent, 18 (11.5 percent); (c)
remained unchanged, 9 (5.8 percent); (d)
increased by between one and 10
percent, 38 (24.4 percent); (e) increased
by between 11 percent and 30 percent,
37 (23.7 percent); (f) increased by
between 31 percent and 50 percent, 8
(5.1 percent); (g) increased by more than
50 percent, 30 (19.2 percent).
Descriptive Statistics,
Item and Factor Analyses,
and Intercorrelations
The properties of the five-item Covin
and Slevin entrepreneurship scale were
investigated by computing internal consistency (Cronbach’s alpha) and itemtotal correlations. Item-total correlations
were in the range 0.62 to 0.75, and the
internal consistency was 0.86 and is comparable to that obtained in previous
studies using this version of the scale
(Sadler-Smith, Spicer, and Chaston 2001).
Both of these parameters (item-total correlations and Cronbach’s alpha) are in
excess of the minimum values suggested
by Nunally (1978) and are taken as evidence of an acceptable level of internal
consistency. In order to explore the
factor structure of the survey instrument,
the entrepreneurial style and management behavior items were subjected to
principal components analysis (KaiserMeyer-Olkin measure of sampling adequacy = 0.83; Bartlett’s test of sphericity,
c2 = 3616.32, df = 741, p < 0.001). The
scree plot (eigenvalues against order of
JOURNAL OF SMALL BUSINESS MANAGEMENT
extraction) suggested that seven principal components (factors) representing
63.78 percent of the total variance should
be extracted. Hair et al. (1998, p.112)
presented guidelines for identifying
significant factor loadings based on sample size. Using this approach, the criterion of salient loading for the present
study (N = 156) was set at 0.45 and
was used as the basis for an interpretation of the resultant factor structure.
Based upon the content of those items
that loaded at or above the salient value
(and using the highest loading in the
those instances where items cross-loaded
at or above this value), the extracted
factors were labeled as follows: factor 1:
managing performance; factor 2: entrepreneurial style; factor 3: managing
process; factor 4: managing stakeholders
and environments; factor 5: managing
culture; factor 6: managing vision; and
factor 7: managing development. The
management behaviors items and their
respective factors and loadings are
shown in the Appendix. Mean scores and
inter correlations were computed for
each of the seven factors and are shown
in Table 2.
Managerial Behavior and
Entrepreneurial Style
Propositions 1a and 1b were tested
by regressing the entrepreneurial style
measure on each of the management
behaviors. The results of the regression
are summarized in Table 3. The computed collinearity statistics (tolerance
values) were in the range 0.40 to 0.70
and were in excess of the threshold value
of 0.10 suggested by Hair et al. (1998,
p.193) and were not taken as denoting
high collinearity. The regression model
was significant (F = 3.12; df = 6, 140;
p = 0.007; R2 = 0.12) and provided
support for Propositions 1a and 1b.
Entrepreneurial style was significantly
but negatively related to managing performance (b = -0.30; t = -2.30; p = 0.023),
thus supporting Proposition 1b. Conversely, managing organizational culture
(b = 0.33; t = 3.37; p = 0.001) and managing vision (b = 0.23; t = 2.05; p = 0.042)
were associated positively with entrepreneurial style, providing support for
Proposition 1a. For managing processes,
stakeholders and environments, and
development, there were no statistically
significant relationships with entrepreneurial style.
Managerial Behavior,
Entrepreneurial Style,
and Firm Type
To test Propositions 2 and 3 firms
we took Birch’s (1979) concept and
used this as the basis to form two categories of firm: high-growth firms (greater
than 30 percent sales growth over the
past five years) and low-growth firms
(30 percent sales growth or less than
over the past five years). Since the objective was to analyze the relationship
between a group of independent variables (managerial behaviors and entrepreneurial style) and a binary outcome
variable (firm type as high growth or low
growth), binary logistic regression was
used (Hair et al. 1998). Table 3 reports
the results of this analysis. Of the original 156 cases, 15 were deleted due to
missing data. The result of the c2 test of
the improvement of the full likelihood
model over the initial model (c2 = 16.42;
df = 7; p = 0.02) suggested that a significant relationship exists between the
total set of independent variables and
the binary dependent measure (membership of the high-growth or lowgrowth group). The results of the
regression indicated that entrepreneurial
style is associated positively with the
probability that a firm is of the highgrowth type (p = 0.002) and hence supports Proposition 2 (see Table 4). The
regression coefficients for the managerial
behaviors are insignificant and hence do
not support Proposition 3.
SADLER-SMITH et al.
57
58
JOURNAL OF SMALL BUSINESS MANAGEMENT
Table 2
Intercorrelations, Means, and Standard Deviations (SD) of Study Variables (N = 156)
Variables
(1)
Managing Performance
(2)
Managing Process
(3)
Managing Stakeholders and
Environments
(4)
Managing Culture
(5)
Managing Vision
(6)
Managing Development
(7)
Entrepreneurial Style
*p < 0.05
**p < 0.01
***p < 0.001
(7)
Mean (SD)
Coefficient a
0.61***
0.05
3.85 (0.62)
0.91
0.43***
0.40***
0.08
3.78 (0.69)
0.86
0.33***
0.50***
0.47***
0.07
3.65 (0.68)
0.83
—
0.29**
0.36**
0.24**
3.47 (0.77)
0.73
—
0.59**
0.18*
4.22 (0.49)
0.83
—
0.11
4.18 (0.53)
0.78
—
2.99 (0.79)
0.74
(2)
(3)
(4)
(5)
(6)
0.61***
0.52***
0.51***
0.60***
—
0.47***
0.49***
—
Table 3
Regression of Management Behaviors on
Entrepreneurial Style
b
t
p
-0.30
0.01
-0.21
0.33
0.23
0.08
-2.30
0.06
-0.20
3.37
2.05
0.71
0.023
0.949
0.842
0.001
0.042
0.481
Variables
Managing
Managing
Managing
Managing
Managing
Managing
Performance
Process
Stakeholders and Environments
Culture
Vision
Development
F = 3.12; df = 6,140; p = 0.007;
R2 = 0.12
Summary of Regression
Table 4
Results of Logistic Regression for Firm Type (High Growth
versus Low Growth)
Variables
Managing Performance
Entrepreneurial Style
Managing Process
Managing Stakeholders and
Environments
Managing Culture
Managing Vision
Managing Development
Summary of Regression
b (SE)
Wald
p
R
(0.56)
(0.29)
(0.40)
(0.39)
0.03
9.43
0.01
1.40
0.854
0.002
0.911
0.236
0.00
0.21
0.00
0.00
0.17 (0.37)
-0.65 (0.54)
-0.08 (0.52)
0.22
1.43
0.02
0.638
0.230
0.880
0.00
0.00
0.00
0.10
0.89
0.50
-0.46
2 log-likelihood (initial model) = 160.21
2 log-likelihood (full model) = 143.79
c2 (df, 7) = 16.42; p = 0.022
R2 = 0.11
Discussion
This study has sought, using a competence-based analytical framework, to
identify the management behaviors that
are associated with an entrepreneurial
style and the relationship with firm type
(defined in terms of growth). The propo-
sition that style and behaviors would be
related received support in that an entrepreneurial style was significantly related
to two aspects of managerial behavior:
1. Managing the culture of the firm by
providing guidance on the ways in
SADLER-SMITH et al.
59
which the businesses’ values are
to be expressed; promoting and
protecting planned work and
the employees who carry it out;
encouraging diversity in working
styles; and identifying and setting
up collaborative and consultative
working arrangements.
2. Managing the vision in terms of
identifying customer needs and
spotting opportunities; identifying problems and opportunities in
products and services; identifying and evaluating competitors
and collaborators; developing
systems to review the external
environment; creating a shared
vision and developing a mission
to give purpose to organization;
and
formulating
appropriate
objectives and strategies to guide
organization.
A nonentrepreneurial style was associated with managing performance
through developing measures and criteria (financial and otherwise) to evaluate
the extent to which the firm’s mission,
objectives, and policies are being
achieved and through diagnosing causes
of success and failure and also through
developing systems for improving future
performance in relation to prespecified
goals. These results may suggest that a
traditional performance managementbased style may be commensurate with
nonentrepreneurial style. Some of these
relationships are shown in Figure 2. The
behaviors associated with managing
organizational
processes
(primarily
goods and services provision and executing programs and plans), managing
stakeholders and environments (political, statutory, and regulatory), and
managing development (evaluating and
improving management and organizational structures and systems) did not
distinguish between entrepreneurial and
nonentrepreneurial organizations. These
management practices may therefore
60
represent generic behaviors used in
the running of a wide variety of small
businesses.
Limitations
The conclusions drawn should be
considered in light of the limitations of
the research. For example, self-report
assessments of managerial behaviors
have
well-documented
drawbacks;
however, this should not be overemphasized since Chandler and Jansen (1992)
observed
significant
correlations
between self-assessment of entrepreneurial and managerial competencies
and performance of startup firms. The
results of post hoc statistical procedures
suggested that common method variance, a widely recognized limitation of
self-report data (see Becherer and
Maurer 1999), is not likely to be problem
in the present study. The design of the
research was cross- sectional rather than
longitudinal or experimental, and hence
the conclusions themselves must be
treated as correlational rather than
casual. Although the response rate compares favorably with other surveys of this
type (see, for example, Chandler and
Hanks 1994; Loan-Clarke et al. 2000), the
fact remains that approximately 70
percent of the sample did not respond.
It is possible that those who did respond
were disproportionately inclined to the
competencies embodied in the standard,
thus creating a response bias. Alternatives to self-report measures of behaviors
should be considered in future research.
Confining the research to a region of the
United Kingdom may have helped to
control for spatial variations, but this fact
coupled with the small-sample size limits
the generalizability of the findings.
Further research in other localities that
uses larger samples and employs appropriate methods to alleviate the effects of
response biases may help to clarify
further the nature of the managerial
behaviors that are associated with entrepreneurial style.
JOURNAL OF SMALL BUSINESS MANAGEMENT
Figure 2
Generic and Specific Management Behaviors
Global
competence
space
Entrepreneurial
managerial
behaviors
Managing
culture
Managing
vision
Generic managerial
behaviors
Managing
processes
Managing
stakeholders
and
environments
Managing
development
Nonentrepreneurial
managerial behaviors
Managing
performance
Nonentrepreneurial
Entrepreneurial
Conclusion
When writing about smaller businesses, recourse often is made to the use
of metaphor, simile, and analogy in order
to highlight different dimensions of this
phenomenon; for example, as already
noted Birch (1979) described fastgrowing innovative firms as gazelles,
while others offer naturalistic similes.
Darwinian analogies sometimes are used
to explain survival (of the fittest), and
population ecology is applied to the
study of life cycles. As part of this debate
and in a summary of the “state of the art
of entrepreneurship,” Churchill (1992,
p.579) recounted the apocryphal story of
the blind men encountering the elephant
for the first time and the difficulties they
came across in describing and classifying
this new and different animal. Churchill
used this analogy to argue that one of
the outcomes of the research in the
1980s and 1990s was a better understanding of the relationship between
entrepreneurship and small business and
a realization of what was unknown.
When encountering a new phenomenon
(like the blind men and the elephant), it
may be helpful sometimes to attempt
to combine different perspectives and to
use existing concepts and vocabulary to
aid the description and classification of
the characteristics of the phenomenon
and the way it behaves. Furthermore,
such an approach may aid communica-
SADLER-SMITH et al.
61
tion among researchers and practitioners
who may be drawn from different fields
of management inquiry.
The aim of the present study has been
to bring together the vocabulary of management competence and that of small
business and entrepreneurship in an
attempt to describe some of the managerial behaviors in smaller and entrepreneurial ventures as an alternative (or
complement) to trait-based perspectives.
Having identified some of the behaviors
that appear to distinguish an entrepreneurial style, further challenges to
research are presented. The types of
managerial behaviors outlined and the
measures used here require further
refinement, elaboration, and augmentation since the content of the items
themselves, it may be argued, reflect
management competencies rather than
entrepreneurial competencies per se.
The data presented here suggest some
overlap between the two domains. The
relationship between management/entrepreneurial competencies and business
context may be a fruitful avenue for
exploration along with the predictive
capacity of the behavior/context interaction. Even if competencies do reflect
desirable managerial behaviors, a contingency perspective suggests that their
relative efficacy is likely to be context
dependent. Furthermore, they may be
viewed as dynamic rather than static in
their interaction with contextual and
temporal factors, such as with respect to
the transitions between the different
stages of a business venture and the relative balance between entrepreneurial
and management competencies. In a
globally competitive business environment in which a high premium is placed
both upon entrepreneurship and managerial effectiveness, the theoretical elaboration and practical application of such
knowledge may be of benefit to
researchers who wish to describe and to
explain the observed variations in behav-
62
ior and management in small firms and
to policymakers and management educators in identifying the skills that an
aspiring entrepreneur may need to have
at his or her disposal.
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Appendix
Results of Factor Analysis for Managerial Behaviors
Variable
SADLER-SMITH et al.
Managing Performance (Factor 1)
Develop measures and criteria to evaluate achievement of organization’s mission, objectives and policies. MB 31.
Evaluate extent to which the organization’s mission, objectives and policies are being achieved. MB 32.
Agree targets for people and units inside and outside the organization. MB 22.
Develop systems for managing future performance. MB 30.
Obtain and evaluate data on performance against key indicators and update plans and schedules. MB 29.
Select key financial and other indicators and monitor programmes, projects and plans. MB 28.
Identify causes of success and failure in programmes, projects, plans and their implementation. MB 33.
Identify possible strengths and weaknesses in organization’s mission, objectives and policies. MB 34.
Define values and policies to develop appropriate organizational culture. MB 13.
Gain support for the organization’s shared vision, mission, objectives, strategies, values and policies. MB 14.
Prepare and submit proposals for programmes, projects and plans to meet the organization’s objectives. MB 15.
Evaluate and amend proposals in the light of the organization’s objectives and its needs as a whole. MB 16.
Managing Process (Factor 3)
Negotiate contracts and agreements with internal and external providers of goods and services. MB 20.
Generate support and obtain resources for programmes, projects and plans. MB 18.
Negotiate and obtain agreement for programmes, projects and plans. MB 19.
Delegate responsibility and authority for areas of action within the organization. MB 21.
Provide professional and technical advice on preparing and implementing programmes, projects and plans.
MB 17.
Loading
0.84
0.76
0.75
0.71
0.62
0.61
0.61
0.61
0.59
0.57
0.55
0.51
0.82
0.72
0.70
0.62
0.51
65
66
Appendix
Continued
Variable
JOURNAL OF SMALL BUSINESS MANAGEMENT
Managing Stakeholders and Environments (Factor 4)
Identify current and likely future interests of stakeholders. MB 9.
Evaluate and influence stakeholder’s capabilities to help or hinder achievement of organization’s objectives.
MB 10.
Evaluate and respond appropriately to changes in political, statutory, regulatory and trading environments. MB2.
Develop systems to review the generation and allocation of financial resources. MB 8.
Managing Culture (Factor 5)
Consult and provide guidance on the ways in which values are to be expressed in work and working
relationships. MB 27.
Promote and protect planned work and those who carry it out. MB 24.
Encourage a diversity of working styles among teams and individuals consistent with the achievement of
organizational objectives. MB 25.
Identify and set up collaborative and consultative working arrangements. MB 26.
Managing Vision (Factor 6)
Identify problems and opportunities in products and services. MB 4.
Develop systems to review the organization’s external operating environment, identify customer needs and spot
opportunities for product and service development. MB1.
Identify and evaluate existing and potential competitors and collaborators. MB 3.
Create shared vision and develop a mission to give purpose to organization. MB 11.
Formulate appropriate objectives and strategies to guide organization. MB 12.
Managing Development (Factor 7)
Identify and evaluate the strengths and weaknesses of management. MB 6.
Review and improve the organization’s structures and systems. MB 5.
Plan how to develop the effectiveness of the management team. MB 7.
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0.67
0.60
0.52
0.83
0.72
0.70
0.66
0.57
0.54
0.54
0.52
0.46
0.74
0.66
0.53
Brief Biographies
Dr. Sadler-Smith is professor of human
resource development at Plymouth
Business School, University of Plymouth, UK and his interests include
human resource development in
smaller firms, organizational learning
and cogniti.
Ms. Hampson is associate lecturer in
human resource studies at Plymouth
Business School, University of Plymouth, UK and her interests include
small business management and
work-life balance.
Dr. Chaston is professor of marketing
and entrepreneurship at Plymouth
Business School, University of Plymouth, UK and his interests include
small firm growth, entrepreneurship
and marketing.
Mrs. Badger is principal lecturer in
human resource studies at Plymouth
Business School, University of Plymouth, UK and her interests include
embedding learning into organizations and small firm management.
SADLER-SMITH et al.
67